Copyright © 2008 Pearson Education Canada5-1 Chapter 5: Negligence, Professional Liability, and...

Copyright © 2008 Pearson Education Canada 5-1

Chapter 5:Chapter 5:Negligence, Negligence, Professional Professional Liability, and Liability, and InsuranceInsurance


Negligence Negligence

Inadvertent, careless conduct that Inadvertent, careless conduct that causes injury to anothercauses injury to another

Important area of tort liability for Important area of tort liability for professionalsprofessionals


Negligence A - D Negligence A - D

Essential Elements: Essential Elements: A: A duty to exercise careA: A duty to exercise care B: Breach of the standard of careB: Breach of the standard of care C: Causation – The act caused the injuryC: Causation – The act caused the injury D: Damages – Victim suffered a lossD: Damages – Victim suffered a loss


Reasonable Person Test Reasonable Person Test

Reasonable person is a prudent person, Reasonable person is a prudent person, in possession of all the facts, exercising in possession of all the facts, exercising carecare

Not the average personNot the average person Not the perfect personNot the perfect person


Is a Duty Owed? Is a Duty Owed?

Reasonable Foreseeability TestReasonable Foreseeability Test If it would be apparent to a prudent If it would be apparent to a prudent

person that the conduct was likely to person that the conduct was likely to cause injury - duty is owed.cause injury - duty is owed.

We owe a duty to anyone we can We owe a duty to anyone we can reasonably anticipate might be harmed reasonably anticipate might be harmed by our conductby our conduct

Is there any reason to reduce or Is there any reason to reduce or eliminate this duty? (eliminate this duty? (AnnsAnns case) case)


Case Summary Case Summary

Donoghue v Stevenson set several Donoghue v Stevenson set several precedents in the law of negligenceprecedents in the law of negligence

The test to determine the existence of a dutyThe test to determine the existence of a duty Product liability - manufacturer owes a duty Product liability - manufacturer owes a duty

to customerto customer Privity of contract will not defeat an action Privity of contract will not defeat an action

for negligence in product liability casesfor negligence in product liability cases


A - Duty of Care A - Duty of Care

MisfeasanceMisfeasance An act that causes harm to anotherAn act that causes harm to another Court will provide remedyCourt will provide remedy

NonfeasanceNonfeasance A failure to prevent an injuryA failure to prevent an injury Courts reluctant to provide remedyCourts reluctant to provide remedy

If a person attempts to help there is a duty to If a person attempts to help there is a duty to exercise reasonable careexercise reasonable care

Courts reluctant to provide remedy without Courts reluctant to provide remedy without special relationshipspecial relationship


B – Breach of a Standard of B – Breach of a Standard of Conduct Conduct

What would a reasonable person have What would a reasonable person have done in the circumstances?done in the circumstances?

Actions that fall below socially Actions that fall below socially acceptable standards create liability for acceptable standards create liability for damages damages

Risk - The greater the risk of injury the Risk - The greater the risk of injury the higher the standardhigher the standard


Liability of ChildrenLiability of Children

Children liable for their tortsChildren liable for their torts standard is that of a reasonable child of that standard is that of a reasonable child of that

ageage Parents not generally responsible for Parents not generally responsible for

their children’s tortstheir children’s torts except where there is obvious failure to except where there is obvious failure to

control, instruct or supervise or a statute control, instruct or supervise or a statute imposed dutyimposed duty


C - Causation C - Causation

The injury must be a direct result of The injury must be a direct result of the careless conductthe careless conduct

But for test - but for the conduct of But for test - but for the conduct of the plaintiff no injury would have the plaintiff no injury would have resultedresulted


D – Damages D – Damages

Plaintiff must show injury to self or loss of Plaintiff must show injury to self or loss of property as a result of defendant’s property as a result of defendant’s negligence – Physical Causationnegligence – Physical Causation

Remoteness Test Remoteness Test Whether the specific type of injury Whether the specific type of injury

suffered was reasonably foreseeable - suffered was reasonably foreseeable - Legal CausationLegal Causation


Judicial Remedies Judicial Remedies

Courts will compensate for:Courts will compensate for: Mental disorder, but not simply mental Mental disorder, but not simply mental

distressdistress Economic lossEconomic loss

Court attempts to restore victim to Court attempts to restore victim to original positionoriginal position


Defences Defences

Contributory negligenceContributory negligence Plaintiff partially responsible for own lossPlaintiff partially responsible for own loss Last clear chance doctrineLast clear chance doctrine

Negligence Act now allows court to Negligence Act now allows court to apportion responsibilityapportion responsibility


Defences/2 Defences/2

Voluntarily assuming the riskVoluntarily assuming the risk A person who volunteers to enter a A person who volunteers to enter a

situation where the risk of injury is situation where the risk of injury is obvious cannot recover damagesobvious cannot recover damages


Special Situations Special Situations

An occupier of property owes a duty An occupier of property owes a duty to people who come onto the to people who come onto the property asproperty as

licenseeslicensees trespassers trespassers inviteesinvitees

The obligation is on the tenant not the The obligation is on the tenant not the landlordlandlord


Special Situations/2 Special Situations/2

Duties of InnkeepersDuties of Innkeepers Safeguard property of guestsSafeguard property of guests Post appropriate section of Innkeepers Post appropriate section of Innkeepers

ActAct Prevent guests from becoming Prevent guests from becoming

intoxicatedintoxicated


LegislationLegislation

Statutes may impose obligations not Statutes may impose obligations not found in common lawfound in common law

No-fault insuranceNo-fault insurance Statutory thresholds for claimsStatutory thresholds for claims Duty of care to unborn child in AlbertaDuty of care to unborn child in Alberta


Question For DiscussionQuestion For Discussion

Social Host LiabilitySocial Host Liability The courts have found both commercial The courts have found both commercial

establishments and private hosts liable for establishments and private hosts liable for injuries sustained by their guests when they injuries sustained by their guests when they have consumed alcohol on their premises.have consumed alcohol on their premises.

What is the standard of care expected of a What is the standard of care expected of a social host and do you think the courts have social host and do you think the courts have gone too far in assessing this kind of liability?gone too far in assessing this kind of liability?


Negligent Misstatement Negligent Misstatement

People who suffer economic loss People who suffer economic loss because of a professional’s negligent because of a professional’s negligent statements may recover damages statements may recover damages

Whether a duty was owed is determined Whether a duty was owed is determined by reasonable foreseeability test by reasonable foreseeability test

This test has been modified by the This test has been modified by the Anns Anns casecase


Case for Discussion Case for Discussion

Haig v. BamfordHaig v. Bamford This case established the legal principle This case established the legal principle

that:that:Liability is restricted to situations where Liability is restricted to situations where the plaintiff knew or should have known the plaintiff knew or should have known that the information provided would be that the information provided would be relied on by a limited group. relied on by a limited group.

Is this restriction appropriate?Is this restriction appropriate?


Strict Liability Strict Liability

Liability when there is no faultLiability when there is no fault When a dangerous situation is created When a dangerous situation is created

by an unusual use of property, the by an unusual use of property, the owner/occupier is liable for all damages owner/occupier is liable for all damages when it escapes when it escapes

E.g., water, animalsE.g., water, animals


Vicarious Liability Vicarious Liability

A form of strict liability—or liability without A form of strict liability—or liability without faultfault

Imposed on employers when they are held Imposed on employers when they are held liable for torts committed by employees liable for torts committed by employees during the course of their employment during the course of their employment


Product Liability Product Liability

Manufacturers are liable for injuries Manufacturers are liable for injuries caused by defective productscaused by defective products

Plaintiff must establish that the Plaintiff must establish that the manufacturer was negligentmanufacturer was negligent

Breach of manufacturer’s duty can be Breach of manufacturer’s duty can be implied from circumstancesimplied from circumstances

Manufacturers must warn of dangers Manufacturers must warn of dangers associated with productassociated with product


Liability of Experts Liability of Experts

Professionals and experts held to a high Professionals and experts held to a high standardstandard

Require skills and abilities expected of a Require skills and abilities expected of a professional in that fieldprofessional in that field

Must exercise skill with degree of care Must exercise skill with degree of care expected from a reasonable person in that expected from a reasonable person in that professionprofession

Inexperience does not excuse incompetenceInexperience does not excuse incompetence Common practice that is dangerous or Common practice that is dangerous or

careless is not an excuse.careless is not an excuse.


Professional Liability Professional Liability

Duty often set out in contractDuty often set out in contract But tort liability requires adherence to a But tort liability requires adherence to a

reasonable standard of performancereasonable standard of performance Courts may extend liability to parties Courts may extend liability to parties

outside of the contractoutside of the contract


Negligence Negligence

Standard of care expected of Standard of care expected of professionalsprofessionals

Reasonable member of the professionReasonable member of the profession Common practice may not measure up Common practice may not measure up

to reasonable standardto reasonable standard Courts will examine the circumstances to Courts will examine the circumstances to

determine if the conduct was reasonabledetermine if the conduct was reasonable


Case for Discussion Case for Discussion

The The HerculesHercules Case Case In In Haig v Bamford,Haig v Bamford, the SCC determined that the SCC determined that

accountants owed a duty of care to those they accountants owed a duty of care to those they knew would rely on the statements they knew would rely on the statements they prepared. prepared.

In the In the HerculesHercules case the SCC applied the case the SCC applied the AnnsAnns test and limited the range of liability to test and limited the range of liability to only those they knew would rely on the only those they knew would rely on the statements they prepared and statements they prepared and who used them who used them as intended.as intended.


Risk Avoidance Risk Avoidance

Professionals should be aware of the Professionals should be aware of the standard of care expected of themstandard of care expected of them

Adapt practices to avoid riskAdapt practices to avoid risk Professionals owe a fiduciary duty to Professionals owe a fiduciary duty to

clientsclients Must act with loyalty and good faithMust act with loyalty and good faith Must disclose pertinent informationMust disclose pertinent information Must use extreme care with funds entrusted Must use extreme care with funds entrusted

to themto them


Professional Insurance Professional Insurance

Often a condition of practice for Often a condition of practice for professionalsprofessionals

Protects against damages resulting from Protects against damages resulting from errors and omissionserrors and omissions

Premiums can be a significant business Premiums can be a significant business expenseexpense

May cover legal costs when professional is May cover legal costs when professional is suedsued


Professional Disciplinary Bodies Professional Disciplinary Bodies

Some exercise significant control over Some exercise significant control over their memberstheir members

With membership requiredWith membership required With power to levy penalties and suspendWith power to levy penalties and suspend Activities regulated by administrative lawActivities regulated by administrative law Charter rights may applyCharter rights may apply Compliance with human rights legislation Compliance with human rights legislation

requiredrequired


Insurance Insurance

Provides compensation for Provides compensation for damaged, lost, or stolen propertydamaged, lost, or stolen property death, illness or disabilitydeath, illness or disability liability liability business interruptionbusiness interruption

Purpose: to reduce the cost of loss by Purpose: to reduce the cost of loss by spreading the risk spreading the risk


Types of Insurance Types of Insurance

Liability - covers injuries caused by Liability - covers injuries caused by negligence of self or negligence of self or employeesemployees

applies only when insured is at faultapplies only when insured is at fault


Types of Insurance/2 Types of Insurance/2

Property - Primarily fire insurance Property - Primarily fire insurance Coverage should correspond to actual Coverage should correspond to actual

value of the propertyvalue of the property Otherwise owner may become co-insurerOtherwise owner may become co-insurer



Business Interruption Insurance Business Interruption Insurance An unforeseen event causes a business An unforeseen event causes a business

to cease operation for a timeto cease operation for a time Covers lost profits and expenses of Covers lost profits and expenses of

bringing business back into operationbringing business back into operation



Life - provides for dependants and/or Life - provides for dependants and/or business associates after death of business associates after death of insuredinsured

Health - medical and disability insuranceHealth - medical and disability insurance covers health care expensescovers health care expenses provides income for disabled workerprovides income for disabled worker


Insurable Interest Insurable Interest

Insured must have personal stake or Insured must have personal stake or interest in whatever is being insuredinterest in whatever is being insured

Can only claim on the insurance to the Can only claim on the insurance to the extent of the value of that interestextent of the value of that interest

Life insurance policies are for the amount Life insurance policies are for the amount stipulated in the contractstipulated in the contract


Insurance IndustryInsurance Industry

Insurance agents – duty to insurance Insurance agents – duty to insurance companycompany

Insurance broker – independent businessInsurance broker – independent business Both have duty of good faith to customerBoth have duty of good faith to customer Adjusters – investigate on behalf of Adjusters – investigate on behalf of

insurance companiesinsurance companies


Insurance ContractsInsurance Contracts

Contra PreferentumContra Preferentum Utmost good faithUtmost good faith SubrogationSubrogation SalvageSalvage


Question for Discussion Question for Discussion

An insurance company can step into the An insurance company can step into the shoes of the insured once it has paid out shoes of the insured once it has paid out on the loss and pursue a claim against on the loss and pursue a claim against the person who caused the loss. No-fault the person who caused the loss. No-fault insurance eliminates this possibility.insurance eliminates this possibility.

What are the benefits and limitations of What are the benefits and limitations of no-fault insurance?no-fault insurance?


Bonding Bonding

A form of insurance that protects A form of insurance that protects employers from the wrongful acts of their employers from the wrongful acts of their employeesemployees

fidelity bond - employer pays a fee to cover fidelity bond - employer pays a fee to cover employee so that if he commits a wrong the employee so that if he commits a wrong the victim will be compensatedvictim will be compensated

surety bond - provides assurance that the surety bond - provides assurance that the party to a contract will perform its part of the party to a contract will perform its part of the contractcontract

Copyright © 2008 Pearson Education Canada5-1 Chapter 5: Negligence, Professional Liability, and...

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